‘Labour’s disarray has sharpened the appetite for an insurgent like Ukip, which is already second in more than 40 Labour seats.’
Photograph: Michael Mayhew/Sportsphoto Ltd./Allstar

Ukip might have just realised its lifelong ambition of securing and then winning a vote to leave the EU, but the party is now bitterly divided. After Nigel Farage’s resignation, the contest to decide his successor threatens to destroy the insurgent party once and for all. While a handful of candidates are jockeying to replace Farage, three are particularly significant.

The first is Steven Woolfe, a Mancunian mixed-race candidate who behind the scenes has support from Farage and his confidantes. Woolfe is best known to voters as Ukip’s migration spokesperson, an MEP for the north-west region and a competent media performer. Inside the party Woolfe is also the candidate who talks the loudest about wanting to double down on Labour territory. He believes that Ukip should be benefiting far more from the unpopularity of Jeremy Corbyn and Labour’s utter failure to talk to working-class voters in a language that they understand. Woolfe’s candidacy, however, will not be confirmed until later today when the party’s national executive committee will rule on whether or not he submitted his nomination papers in time.

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Second is Diane James, also an MEP, an experienced candidate who is best known for almost winning the Eastleigh byelection. James is respected within the party, liked by most activists and could be a leader who would genuinely connect in the southern Conservative shires. Should James win she might be tempted to appoint a deputy who could simultaneously appeal to Labour heartlands. Her strength is reflected in the fact that many bookies see her as the favourite. Senior activists tell me that if Woolfe is excluded from running for the leadership, they will switch to James in order to stop what they see as a takeover of Ukip led by Douglas Carswell and Suzanne Evans.

And finally there is Lisa Duffy, a relatively unknown councillor and organiser around whom critics of Farage such as Evans and Patrick O’Flynn are rallying. But Duffy has almost no media experience and would be torn apart by reporters.

Whoever wins, it is difficult to see how the new leader will bring unity to a party that has arguably never had it. Should Woolfe or James emerge victorious, then it is likely that the Farageists will step up their efforts to reform the NEC (the members of which Farage has dismissed as “amateurs”) and silence their critics once and for all. Should anyone else win, notably Duffy, then I would expect a mass exodus while Farage, the influential donor Arron Banks and their followers form a new movement based on the data that Leave.EU amassed during the referendum.

Beyond the current crisis is there still room for Ukip, or a similar party, in a post-referendum Britain? There is certainly space. Labour’s disarray has sharpened the appetite for an insurgent like Ukip, which is already second in more than 40 Labour seats. The growing bond between the radical right and Labour areas is also reflected in the fact that while the vast majority of middle-class Labour MPs voted to remain in the EU, 60% of Labour seats opted to leave.

Then there are the forthcoming local elections in 2017 that offer Ukip another chance to inflict damage on Labour and sustain pressure on the Conservatives. There is potential to gain ground in Conservative county councils in southern England – Buckinghamshire, Dorset and Kent – where Ukip has polled well in the past, but also in Labour-held councils across Wales – Blaenau Gwent and Merthyr Tydfil – where only a few months ago the self-anointed People’s Army broke into the Welsh assembly.

Under normal circumstances you might expect Ukip to be gearing up to exploit these openings. But neither Farage nor his party has so far proved able to resolve the tensions and personality disputes that have been bubbling under the surface for the past two years. While Carswell brought Ukip a presence in the House of Commons, his arrival was also the catalyst for a prolonged period of damaging infighting that turned old friends into foes. Some of those who flocked to Ukip during its takeoff period were not quite aware of what they were joining – an overtly nativist political movement. Farage, meanwhile, never quite managed to take full control of the party’s NEC.

All of this leaves Ukip at a crossroads. The old and unwritten law in the party was that “Nigel always wins”. But with Farage ruling out what would have been his fourth return as Ukip’s leader, the party’s future looks more uncertain than ever before.

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Some in Labour might laugh, cheer even, at the fallout. Labour MPs in the north will breathe a sigh of relief, believing that the apparent disintegration of their new rival will relieve pressure. But only a fool would view events in these terms. There is another interpretation and it spells disaster for Labour.

If Ukip does implode then where would its voters go? They would certainly not endorse Corbyn. His team might cheer as they continue to stack up votes in safe seats, such as Oldham and Tooting, but at the next general election they will experience nothing short of disaster that will, in turn, take decades to recover from.

Just look at the numbers. If Theresa May wins over just half of the Ukip electorate, then at least three dozen Labour seats could easily fall to the Conservatives. Then there are the former Labour seats that were captured by the Conservatives in 2015, such as Morley and Outwood, where the collapse of Ukip would help May to turn a fragile lead into a strong one.

Labour is thus caught between a rock and a hard place. Should Ukip elect the competent Woolfe or James, both of whom are willing to exploit Labour’s weakness, then the left will almost immediately come under renewed pressure in its heartlands. But should Ukip instead disintegrate and May pick up the pieces, then Labour could find itself losing a whole swath of electoral territory.